Chapter 3 What Is Money? Multiple Choice )1 Ther e is no s ingle precise measu re of money or th e mon ey s uppl y fo r eco nomi sts becau se ()a the government considers money supply stati stics to be co nfidential and refuses to pub lish them. ()b deciding what is gene rally accepted in payment for goods and services o r in the repayment of debt is difficult to determine. ()c economists cannot ag ree if currency sh ould be considered money. ()d of eac h of the above. ()e of bot h (a) a nd (b) of the above. Answer: Question Status: revious !dition )" !co nomist s fin d no co mpl ete ly sa tis fac tor y way t o mea sur e mon ey be cause ()f money s uppl y stat isti cs are a st ate sec ret. ()g the #ederal $eserve does not employ or report differen t measures of th e money suppl y. ()h the %moneyness& or li'uidity of an asset i s a matter of d egree. ()i economists find dis agreement int eresting and refuse to agree for ideolo gical reaso ns. Answer: Question Status: revious !dition )urrency includes ()* pap er mone y a nd coi ns. ()+ paper mo ney, co ins, an d chec +s. ()l pap er mo ney and che c+s . ()m paper money, coins, chec+s, and savings deposits . Answer: Question Status: revious !dition
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
8/14/2019 Mishkin Tb03
http://slidepdf.com/reader/full/mishkin-tb03 1/33
Chapter 3What Is Money?
Multiple Choice
)1 There is no single precise measure of money or the money supply for economists because
()a the government considers money supply statistics to be confidential and refuses to publish them.
()b deciding what is generally accepted in payment for goods and services or in the repayment of
debt is difficult to determine.
()c economists cannot agree if currency should be considered money.
()d of each of the above.
()e of both (a) and (b) of the above.
Answer:
Question Status: revious !dition
)" !conomists find no completely satisfactory way to measure money because
()f money supply statistics are a state secret.
()g the #ederal $eserve does not employ or report different measures of the money supply.
()h the %moneyness& or li'uidity of an asset is a matter of degree.
()i economists find disagreement interesting and refuse to agree for ideological reasons.
Answer:
Question Status: revious !dition
) urrency includes
()* paper money and coins.
()+ paper money, coins, and chec+s.
()l paper money and chec+s.
()m paper money, coins, chec+s, and savings deposits.
Answer:
Question Status: revious !dition
8/14/2019 Mishkin Tb03
http://slidepdf.com/reader/full/mishkin-tb03 2/33
- #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition
) The difference between money and income is that
()n money is a flow and income is a stoc+.
()o money is a stoc+ and income is a flow.
()p there is no difference2money and income are both stoc+s.
()' there is no difference2money and income are both flows.
Answer:
Question Status: revious !dition
)- 3t is true that
()r income and wealth are both stoc+s.
()s money and income are both stoc+s.
()t income is a flow and wealth is a stoc+.
()u money and wealth are both flows.
()v money and income are both flows.
Answer:
Question Status: 4ew
)5 6hen people say, %7ill 8ates sure is rich, he has a lot of money,& they probably mean that7ill 8ates
()w has a large chec+ing account balance.
()9 is 'uite wealthy.
()y has a relatively high income.
() all of the above.
()aaonly (a) and (b) of the above.
Answer:
Question Status: revious !dition
); An individual<s annual salary is her
()bb money.
()ccincome.
()dd wealth.
()eeliabilities.
()ff assets.
Answer:
Question Status: 4ew
)= A person<s house is part of her
()gg money.
()hh income.
()ii liabilities.
()** wealth.
()++ all of the above.
Answer:
Question Status: 4ew
8/14/2019 Mishkin Tb03
http://slidepdf.com/reader/full/mishkin-tb03 3/33
hapter 6hat 3s /oney> 5?
) A person<s chec+ing deposits are part of her
()ll money.
()mm income.
()nn wealth.
()oo all of the above.
()pp only (a) and (c) of the above.
Answer:
Question Status: 4ew
)1? A penny collection is
()'' money.
()rr income.
()sswealth.
()tt all of the above.
()uu only (a) and (c) of the above.
Answer:
Question Status: 4ew
)11 /oney is
()vv anything that is generally accepted in payment for goods and services or in the repayment ofdebt.
()ww fre'uently2but incorrectly2used synonymously with wealth.
()99 paper money, coins, and chec+s.
()yy all of the above.
()only (a) and (c) of the above.
Answer:
Question Status: $evised
)1" /oney is
()aaa anything that is generally accepted in payment for goods and services or in the repayment of
debt.
()bbb fre'uently2but incorrectly2used synonymously with wealth.
()ccc a flow of earnings per unit of time.
()ddd all of the above.
()eee only (a) and (b) of the above.
Answer:
Question Status: revious !dition
)1 6hich of the following are true statements>
()fff 6ealth is the total collection of pieces of property that are a store of value.
()ggg /oney is fre'uently confused with income.
()hhh 3ncome is a flow of earnings per unit of time.
()iiiAll of the above are true.
()***@nly (a) and (b) of the above are true.
Answer:
Question Status: revious !dition
8/14/2019 Mishkin Tb03
http://slidepdf.com/reader/full/mishkin-tb03 4/33
8/14/2019 Mishkin Tb03
http://slidepdf.com/reader/full/mishkin-tb03 5/33
hapter 6hat 3s /oney> 5"
)1 6hen an economist states that barter is impossible, she doesn<t really mean that barter is impossible.
Ber real meaning is that
()gggg barter transactions are relatively costly.
()hhhh barter has no useful place in today<s world.
()iiii it is impossible for barter transactions to leave parties to an e9change better off.
()**** barter is illegal.
()++++ each of the above is true.
Answer:
Question Status: Study 8uide
)"? A problem with barter e9change is that barter re'uires
()llll a double coincidence of wants.
()mmmm specialiation.
()nnnn standardiation.
()oooo mutual respect.
()pppp a common denominator to determine prices.
Answer:
Question Status: 4ew
)"1 The problem of the double coincidence of wants can be avoided if
()'''' trade is organied in a central mar+et.
()rrrr money is used to facilitate e9changes.
()ssss barter trades are encouraged.
()tttt both (a) and (b) of the above.
Answer:
Question Status: revious !dition
)"" The conversion of a barter economy to one that uses money increases efficiency by reducing
()uuuu the need to e9change goods.
()vvvv the need to specialie.
()wwww the need to employ team production methods.
()9999 transactions costs.
Answer:
Question Status: revious !dition
)" The conversion of a barter economy to one that uses money
()yyyy increases efficiency by reducing the need to e9change goods and services.
() increases efficiency by reducing the need to specialie.
()aaaaa increases efficiency by reducing transactions costs.
()bbbbbdoes not increase economic efficiency.
Answer:
Question Status: revious !dition
8/14/2019 Mishkin Tb03
http://slidepdf.com/reader/full/mishkin-tb03 6/33
5 #rederic S. /ish+in 0 Economics of Money, Banking, and Financial Markets, Seventh !dition
)" 6hich of the following are true statements>
()ccccc The conversion of a barter economy to one that uses money increases efficiency by reducingthe cost of e9change.
()dddddThe conversion of a barter economy to one that uses money increases efficiency by reducing
the cost to those who wish to specialie.
()eeeee The conversion of a barter economy to one that uses money increases efficiency by reducing
transactions costs.()fffff All of the above are true.
()ggggg@nly (a) and (c) of the above are true.
Answer:
Question Status: revious !dition
)"- 6hich of the following are true statements>
()hhhhhThe conversion of a barter economy to one that uses money increases efficiency by
increasing the cost of e9change.
()iiiii The conversion of a barter economy to one that uses money increases efficiency by
increasing the cost to those who wish to specialie.
()***** The conversion of a barter economy to one that uses money increases efficiency by reducingtransactions costs.
()+++++All of the above are true.
Answer:
Question Status: revious !dition
)"5 6hich of the following are true statements>
()lllll The conversion of a barter economy to one that uses money increases efficiency by
increasing the cost of e9change.
()mmmmm The conversion of a barter economy to one that uses money increases efficiency
by reducing the cost to those who wish to specialie.
()nnnnnThe conversion of a barter economy to one that uses money does not increase economicefficiency.
()oooooAll of the above are true.
Answer:
Question Status: revious !dition
)"; 6hen compared to e9change systems that rely on money, disadvantages of the barter system
include:
()pppppthe re'uirement of a double coincidence of wants.
()'''''increasing the cost of e9changing goods over time.
()rrrrr raising the cost of e9change to those who would specialie.
()sssss all of the above.
Answer:
Question Status: revious !dition
8/14/2019 Mishkin Tb03
http://slidepdf.com/reader/full/mishkin-tb03 7/33
hapter 6hat 3s /oney> 5
)"= 6hen compared to e9change systems that rely on money, disadvantages of the barter system
include:
()ttttt the re'uirement of a double coincidence of wants.
()uuuuulowering the cost of e9changing goods over time.
()vvvvvlowering the cost of e9change to those who would specialie.
()wwwww all of the above.
Answer:
Question Status: revious !dition
)" 7ecause it is a medium of e9change, money
()99999eliminates the re'uirement for a double coincidence of wants.
()yyyyyencourages specialiation.
() reduces transaction costs.
()aaaaaa does all of the above.
()bbbbbb does only (a) and (b) of the above.
Answer:
Question Status: revious !dition
)? 7ecause it is a medium of e9change, money
()cccccc encourages specialiation and the division of labor.
()dddddd reduces transaction costs.
()eeeeee is not allowed to earn interest.
()ffffff does all of the above.
()gggggg does only (a) and (b) of the above.
Answer:
Question Status: revious !dition
)1 7ecause it is a medium of e9change, money
()hhhhhh discourages specialiation and the division of labor.
()iiiiii reduces transaction costs.
()****** is not allowed to earn interest.
()++++++ does only (b) and (c) of the above.
Answer:
Question Status: revious !dition
)" 7ecause it is a medium of e9change, money
()llllll does not earn interest.
()mmmmmm eliminates the re'uirement for a double coincidence of wants.
()nnnnnn must be currency.
()oooooo cannot be a durable asset.
Answer:
Question Status: revious !dition
8/14/2019 Mishkin Tb03
http://slidepdf.com/reader/full/mishkin-tb03 8/33
8/14/2019 Mishkin Tb03
http://slidepdf.com/reader/full/mishkin-tb03 9/33
hapter 6hat 3s /oney> 55
)= #or a commodity to function effectively as money it must be
()lllllll easily standardied, ma+ing it easy to ascertain its value.
()mmmmmmm widely accepted.
()nnnnnnn deteriorate 'uic+ly so that its supply does not become to large.
()ooooooo all of the above.
()ppppppp only (a) and (b) of the above.
Answer:
Question Status: revious !dition
) 3f it is generally acceptable as a medium of e9change then it
()''''''' must be a commodity.
()rrrrrrr must be a precious metal such as gold or silver.
()sssssss is money.
()ttttttt all of the above.
Answer:
Question Status: revious !dition
)? All but the most primitive societies use money as a medium of e9change, implying that
()uuuuuuu the use of money is economically efficient.
()vvvvvvv barter e9change is economically inefficient.
()wwwwwww barter e9change cannot wor+ outside the family.
()9999999 all of the above.
()yyyyyyy only (a) and (b) of the above.
Answer:
Question Status: revious !dition
)1 6hatever a society uses as money, the distinguishing characteristic is that
() it must be completely inflation proof.
()aaaaaaaa it must be generally acceptable as payment for goods and services or in therepayment of debt.
()bbbbbbbb it must contain gold.
()cccccccc it must be produced by the government.
Answer:
Question Status: revious !dition
)" Although it can have a number of characteristics and serves more than one role, money must
)== 6hen prices in a particular country rise e9tremely rapidly, the country suffers
()yyyyyyyyyyyyyyy deflation.
()disinflation.
()aaaaaaaaaaaaaaaa hyperinflation.
()bbbbbbbbbbbbbbbb all of the above.
Answer:
Question Status: revious !dition
)= 7ecause inflation in 4icaragua in 1? topped 1,??? percent, one can conclude that the 4icaraguan
economy suffered from
()cccccccccccccccc deflation.
()dddddddddddddddd disinflation.
()eeeeeeeeeeeeeeee hyperinflation.
()ffffffffffffffff superdeflation.
Answer:
Question Status: revious !dition
)? 3f merchants in the country Ied choose to close their doors, preferring to be stuc+ with rottingmerchandise rather than worthless currency, then one can conclude that Ied is e9periencing a
()gggggggggggggggg superdeflation.
()hhhhhhhhhhhhhhhh hyperdeflation.
()iiiiiiiiiiiiiiii disinflation.
()**************** hyperinflation.
Answer:Question Status: revious !dition
)1 3f currency in the country of Ied is seen as worthless by its citiens, then Ied is probably
)15 3f an individual moves money from a (noninstitutional) money mar+et mutual fund to a largeC
denomination time deposit account,
()9999999999999999999999999 /" decreases and / stays the same.
()yyyyyyyyyyyyyyyyyyyyyyyyy /" stays the same and / increases.
() /" stays the same and / stays the same.
()aaaaaaaaaaaaaaaaaaaaaaaaaa /" increases and / decreases.
Answer:
Question Status: revious !dition
)1; 3f an individual moves money from a money mar+et deposit account to currency,
()bbbbbbbbbbbbbbbbbbbbbbbbbb /1 increases and /" stays the same.
()cccccccccccccccccccccccccc /1 stays the same and /" increases.
()dddddddddddddddddddddddddd /1 stays the same and /" stays the same.
()eeeeeeeeeeeeeeeeeeeeeeeeee /1 increases and /" decreases.
Answer:
Question Status: revious !dition
)1= 3f an individual moves money from a (noninstitutional) money mar+et mutual fund to a moneymar+et deposit account,
()ffffffffffffffffffffffffff /" decreases and / stays the same.
()gggggggggggggggggggggggggg /" stays the same and / increases.
()hhhhhhhhhhhhhhhhhhhhhhhhhh /" stays the same and / stays the same.
()iiiiiiiiiiiiiiiiiiiiiiiiii /" increases and / decreases.
Answer:Question Status: revious !dition
)1 The growth rates of monetary aggregates
()************************** follow one another e9actly.
()++++++++++++++++++++++++++ tend to move together in the short run but not in the long run.()llllllllllllllllllllllllll are unrelated in the long run.
()mmmmmmmmmmmmmmmmmmmmmmmmmm tend to move together in the long run but
can diverge in the short run.
()nnnnnnnnnnnnnnnnnnnnnnnnnn are most closely related during the 1?s.
Answer:
Question Status: 4ew
)1-? The decade during which the growth rates of monetary aggregates diverged the most is